During Diwali in Goa, many taxpayers were surprised by unexpected error notices from the Income Tax ( IT ) Department.
The issue primarily affected those who filed under Section 5A of the Indian Income Tax Act, the unique income treatment under the Portuguese Civil Code. This code, followed in Goa, Daman, and Diu, recognizes a community property system, where spouses jointly own and share income equally. This provision is distinct because it requires income to be split between spouses, even if one spouse is the sole earner.
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Due to a glitch in the Income Tax portal, several taxpayers, especially those filing jointly under Section 5A of the Income Tax Act under the Portuguese Civil Code, received notifications claiming their tax returns were defective for the assessment year 2023-24.
These notices stated that the taxpayers or their spouses needed an audit under Section 44AB of the Income Tax Act, 1961, and had failed to submit the necessary audit report. This mistake shocked many, as many of them did not need an audit, suggesting a problem in the system.
The Goa Chamber of Commerce and Industry ( GCCI ), recognizing the widespread impact of this technical glitch, has raised the issue with the Union Ministry of Finance.
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In a public appeal, the GCCI expressed concern that the unwarranted notices are causing stress and inconvenience for taxpayers who now face the process of responding to defective return notices.
“The only solution available right now seems to be submitting an audit report of the spouse, which many find unjustified and unnecessary,” said a GCCI spokesperson.
Chartered accountants across the state have corroborated that the issue was raised by a processing error in the Income Tax portal. They note that this glitch has not only affected Goan taxpayers under Section 5A but has also incorrectly flagged joint filings as defective, making the situation particularly frustrating for those adhering to the correct filing procedures.
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The GCCI has appealed to the government for an immediate resolution, urging the Ministry of Finance to issue a clarification to prevent taxpayers from having to submit unwarranted documentation. The chamber hopes for a solution that will reassure taxpayers and correct the erroneous processing on the IT portal, allowing Goans to proceed without additional stress.
Until a fix is implemented, tax professionals are advising recipients of these notices to consult with their chartered accountants to explore options for responding, even as they await government clarification on this troubling glitch.
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